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The Business of Showbiz: Viacom vs. DirecTV

Who Won The War: DirecTV Or Viacom?By David Lieberman

DirecTV seems to have the edge in my non-scientific checks with industry watchers who monitored the contract dispute that for 10 days prevented 20M satellite customers from seeing Viacom’s 17 channels. But there are champions for both sides — and nobody outside of the companies knows enough about the financial terms to make a solid case for his or her view. Here’s what I’m told: DirecTV’s first year payment to Viacom in the seven-year deal is a double-digit percentage step up from what it was paying before, but less than the 30% that DirecTV said Viacom initially wanted. After that, DirecTV’s outlay for Viacom’s channels will rise by mid-single digit percentages each year. The deal gives DirecTV the right to stream Viacom programming to its customers — both inside and outside of their homes — via the satellite provider’s TV Everywhere program. And it doesn’t have to carry premium movie channel Epix, but has the option to pick it up.

When the talks initially broke down, Viacom said that its channels accounted for about 5% of the nearly $10B that DirecTV spent on programming last year — about $500M. Some say that the new deal would bring that to 6%, or $600M, but that’s in dispute.